Martin Lewis has warned people to check their payslips for an 'X'. If you spot it, the money guru said there is a chance you are on the wrong tax code.
The founder of Money Saving Expert made the warning as he appeared on his ITV Money Show Live. He answered a question from viewer Tina, who said she had been overtaxed and wanted to know if she was entitled to a rebate. She said: "I’m on a 16-hour contract, and last month, I did lots of overtime. I was put on the basic rate temporarily and overtaxed by more than £800."
The caller added: “My tax code is now back to 1257L, but I’m short £500, worrying about money. Will I get a tax rebate?” Luckily for her, tax expert Rebecca Benneyworth was on the show, reports the Echo.
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The expert said: "It depends whether she’s on a Month One tax code or not. Month One is often referred to as Emergency Code. If she is, she needs to sort that with HMRC, either by phoning them or by going into her personal tax account through the HMRC app."
If employees suspect they're on an emergency tax code, Rebecca advised they should look out for an "X" on their payslip. She said: “On her tax code, she’ll have 1257L. If she’s got an ‘X’ on the end (1257LX), she’s on Month One. Otherwise, if it’s not got an ‘X’ on the end, it should come back in her next pay packet. If it doesn’t, speak to your employer.”
This normally happens if HMRC doesn't have enough details about how much tax you need to pay - you're most likely to be on emergency tax when you start a new job. You may also see 1257 W1 or 1257 M1 on your pay slips, if you're on emergency tax.
Martin said: "If you’ve got the wrong tax code, go to HMRC. If you’re not getting the tax back, go and talk politely to your employer. Many payroll departments are actually pretty helpful if you’re struggling with this...Each year, you’re sent your tax code if you’re an employee. The standard one is 1257L. What that actually means is £12,570 - which is how much you can earn tax free each year.
“Millions of people are on the wrong tax code. Some are overpaying and are therefore due thousands of pounds back. Some are underpaying and are therefore going to get a shock as they’re asked for more money. So it’s really important, because it's your legal responsibility - not HMRC, not your employer - to check your tax code."
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